It is possible the boomers will divest at the same time and cause the market to recede. It is also possible they will leave their money there, in different assets, and nothing will happen.
In any event, the younger boomers would be at the greatest risk. Or would they? Do the young boomers constitute the bulk of the Boomers? Or is it the older ones?
What do you think?
National health care for seniors is a platform for the next pres. election, and I plan to vote for someone with a good plan. We need national health care so seniors on SS can have medical coverage.
on the stock market: it could go either way…now that they are retired they are bored and want to spend more boosting the economy….or, like most boomers, they really haven’t been saving for retirement so we could go into a recession.
Also, they will drain the SS down to nothing b/c they don’t have 401K’s, most don’t have good health plans or pentions (you can blame Corp. America and Eron for that) so since they’re retired they will use the next best available…Medicaid and Medicare.
Only the unexpected happens in the market.
The wave of retiring boomers is too huge to ignore so even if you hear about the possible negative ramifications in the market, you don’t know how the market is going to adjust.
True, boomers will need income, preferably inflation protected/indexed, and selling stock is only one way. Another way may be equity income. Companies that buy back stock now may opt for paying higher dividends down the road to make their securities more attractive to the boomers.
And don’t forget about all the talent on Wall Street that will come up with new attractive products to SELL to boomers.
The bottom line: you don’t know how these things will play out (very few predicted the Internet bubble burst or the recent real estate boom), so trade what’s in front of you.
My only l.t. bet so far is CNS – they specialize in equity income funds catering to retiring boomers.
Financial planners suggest their clients to move their funds from volatile asset (stock market) into more stable ones (property, bonds, money market, etc) as they near their retirement.
Thus, if the baby boomers follow this advice, it is likely the stock market will tumble. This, of course, only happens if there’s no more funds coming in. The ‘weight of money’ argument is a good argument against stock market crashing due to withdrawal of funds by baby boomers.
As for the risk factor, I’m sure it really depends on the individual. The volatility will still be there. It’s up to the investor/speculator and their advisers to handle the funds prudently.
I really don’t worry about baby boomers retiring, nor their impact on healthcare. Why? 60% of boomers are obese. That rranslated into FAT. They will become diabetics, die of heart attacks or both.
Keep investing ****.
At some point, boomers will realize that they haven’t saved sufficient amounts for retirement and that even Hillary can’t save them.
At this point of resignation, boomer conspicuous consumption should fall finally and savings increase, benefiting money management firms such as T. Rowe Price, Legg Mason, Janus, etc.; assisted living and healthcare firms eventually should benefit, but it’s uncertain how politics will interfere with this eventuality. If this theory is right, don’t count on cruise lines getting a boost.
BTW, don’t forget that there are even more Echo Boomers than Baby Boomers (the original boomers already are disappearing) and the Echo Boomers only now are beginning their consumption ramp.
If you can catch the right homebuilders at the bottom, they may benefit from both baby boomers wanting retirement homes and echo boomers wanting modern housing. This assumes that anybody will be able to afford housing.
Essentials may come back into fashion and higher tax rates, etc., will kill the luxury retailers, at least in the U.S. Is Wal-Mart, dead for years, about to be rejuvenated (they’ll have a great labor supply in Boomers desperate for retirement income)?
I wouldn’t worry about buyers for boomer stocks. Chinese, Indians, and Arabs probably will grab anything available for sale.
Just thinking out loud. It was a great question. Demographics can be the source of great investment ideas.
Thanks!
P.S. Buy funeral stocks with care. Somewhere I read that most boomers will be cremated.